cobraboy, you are an economist, so correct me if i am wrong. the solution to the economic malaise is not a massive tax increase. the government should have focused, primarily, on spending cuts. a country of 9 million people should not have 650,000 government employees. the head of the Central Bank should not be earning a higher salary that the POTUS. the deficits that the country is experiencing did not arise from revenue shortfalls, but from spending overruns. therefore, if that aspect goes unattended, no amount of tax revenue will fix the situation. over to you.
So true....but it is the easy solution for all governments.....and lets not forget that these new taxes are not to correct any balance of payments problems, i.e arrearages....they are just so that the government can meet its anticipated spending deficit for the current year.
Wait till the IMF comes in at the end of the month and starts to talk about the new taxes to meet the current arrearages. If it has not done so already, the DR is/will start to lose any edge it has with expats or businesses moving there, and quite possibly may drive expats elsewhere....not to mention a slowdown in an economy that institutes the kind of sudden and radical tax increases just implemented. Absent some sort of economic surge, the handwriting is on the wall, the economy will slow even further.
The IMF predicted 4% growth in 2012 and it may well come in under that. That is down from 7.8% growth in 2010. Projections for 2013 are in the 3% range....yet borrowing and spending has not been adjusted downward to reflect a slowing economy, and thus the need for new taxes to maintain the status quo.
None of this can be easy on the average Dominican and in the months ahead as the reality of these taxes sets in, I expect to see some real pushback by some or all of the usual protest groups.
Respectfully,
Playacaribe2